In his recent speech at Lake Harriet, President Obama decried the earnings gap among genders. Minnesota women now earn 80 cents for each dollar earned by men who also work full time and year-round, and it’s worse for older women, rural women and women of color.

This election season, you will be hearing lots more about this. But if you seek to be a competitive employer providing fair pay, you might be frustrated by the various terms being used. Here’s your primer for the “equal pay” section of the Women’s Economic Security Act (WESA), which becomes effective Aug. 1.

Any business executing a state contract of $500,000 or more, with more than 40 employees, must get an equal-pay certificate from the Minnesota Department of Human Rights. Here’s the oft-repeated mantra of the Minnesota Chamber of Commerce and Minnesota Business Partnership: Advocates were trying to trick you into “comparable worth,” but thanks to us, the law only requires “equal pay for equal work.” But both terms can be misleading.

In the 1970s, the term was “equal pay for work of comparable value” — jobs within a particular workforce with different duties, but judged by management to have similar levels of skill, effort and responsibility. Not a bad idea! But in 1982 and 1984, the Minnesota Legislature enacted two laws using the term “pay equity” instead — laws that cover the state and every city, county and school district. Thirty years later, routinely enforced, those laws have been successful by every measure.

In early drafts of WESA, the Pay Equity Coalition advocated for large contractors receiving taxpayer dollars to undertake a similar process. These contractors would need to self-study using objective job evaluation to identify any pattern of underpaying women. Unlike the previous laws, businesses would have been allowed to keep pay data private. But reaction from the massive business lobby was ferocious. Ignoring public-sector success and using the label “comp worth” as if it were a sexually transmitted disease, business tried to kill the bill. They wanted “pay equity” to mean the narrowest possible interpretation of “equal pay for equal work,” asserting that “the market” is the only valid approach to compensation.

The truth is, there is a middle ground between comparing only jobs with identical duties and using job evaluation to compare all jobs. The Equal Pay Act of 1963 (cited in WESA) prohibits gender pay differences for “equal work on jobs the performance of which requires equal skill, effort, and responsibility … except where such payment is made pursuant to [seniority, merit, etc.]” Even that long-standing law is not limited to identical job duties — although it has been interpreted narrowly. In addition, WESA requires assurance “that the average compensation for its female employees is not consistently below the average compensation for its male employees within each of the major job categories [the nine EEO-1 occupational groups] … taking into account factors such as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions of the job or other mitigating factors.”

iStockphoto.com

iStockphoto.com

In final form, WESA does not require job evaluation. There will be no comparisons of pay between occupational groups, such as welders and social workers. However, WESA does require comparison within occupational groups, such as “professionals.” The law does not allow “paying the market” as an excuse for paying women at a discount. Information from the audits will improve information about private-sector pay, laying the groundwork for progress on the earnings gap. And WESA prohibits retaliating against any employee for discussing her pay, so women can begin to advocate for themselves. The new law, while certainly not “pay equity,” will motivate wise employers to undertake a quick review to ensure that they are paying fairly.

Business could do itself a favor by reviewing the state’s positive experience with public-sector pay equity: reducing the earnings gap at low cost, while defending a sensible compensation structure. Minnesota women, families and business have everything to gain.

Bonnie Peace Watkins wrote the Pay Equity Task Force Report of the Council on the Economic Status of Women (1980), implemented the Local Government Pay Equity Act as the first pay equity coordinator (Department of Employee Relations, 1984 to 1988) and wrote the administrative rule for that law (1990). Since then, she has been a volunteer advocate for the Pay Equity Coalition of Minnesota.